Adcorp makes a move on loss-making units

print

Adcorp makes a move on loss-making units

Published Date: 2017-10-24 | Source: Stephen Gunnion | Author: Stephen Gunnion

Adcorp makes a move on loss-making units

The resourcing and staffing group says the core of its business recorded a stable to strong performance

Adcorp has had a tough six months, with earnings under pressure at its Support Services and Industrial Services units. However, the resourcing and staffing group says the core of its business has recorded a stable to strong performance from the prior period and it's focused on a strategic and operational efficiency review of the Support Services business, where profit fell sharply due to lower volumes and one loss-making contract, which has now been favourably renegotiated. Industrial Services was affected by the wind-down of its Fortress business.

It has also recorded once-off bad debt write-offs of around R78.4 million, largely due to a serious lapse in credit controls in Fortress. Adcorp says it's confident that the lapse in controls has been plugged and its credit control has been tightened, which should result in a reduced debtors book going forward. Restructuring initiatives undertaken by the new management have pushed central costs R43 million higher.

The group has also taken the decision to exit its business across the rest of Africa, which continues to make losses. It says the half-year results include the related impairment adjustment of about R65 million. Its Australia operations have been stable and positive across all business units. It says on the back of improved profitability, its managed to pay down borrowings. It now plans to consolidate and refinance all its debt after receiving firm commitments from funders for a R1 billion credit facility.

For the six months to end August, Adcorp says it will report a basic loss per share of between 110c and 132c, from earnings of 78.4c last year, while its headline loss per share will be between 38c and 45c against headline earnings of 77.5c.

Its shares ended 0.4% firmer at R13.50.



Similar Stories